Just a few short years ago, mortgage interest rates were hovering near historic lows, prompting many homeowners to consider refinancing their mortgages in Oregon to take advantage of lower rates and save on their home loans. But this trend has seemingly reversed, as we are now experiencing rising mortgage rates in Oregon.
Home prices are also relatively healthy in the state of Oregon, despite slight dips in the average home price.
Considering this, homeowners in Oregon are finding themselves with a lot more equity in their homes simply from appreciation over time.
As such, many homeowners in the state have opted for cash-out refinances to tap into that home equity and convert it into usable cash. The funds can be used for any number of things, including home renovation projects that can further boost the value of their homes.
What Will Happen to Cash-Out Refinancing Trends in Oregon?
The recent rise in mortgage interest rates has impacted cash-out refinances in Oregon. However, the Mortgage Bankers Association (MBA) forecasts that rates will decline in 2024, which could impact the number of cash-out refinances that will take place in Oregon throughout 2024T.
Here’s an updated look at cash-out refinancing and home-price trends in Oregon.
Cash-Out Refinance Loans in Oregon
What exactly is a “cash-out refinance” program? Essentially, this type of mortgage refinancing option involves taking out a new mortgage for a larger amount compared to the existing loan amount to convert home equity into liquid cash. The difference between the larger loan amount and what is still currently owed can be provided to homeowners in cash that can then be used to cover various expenditures.
Cash-out refinancing is an increasingly popular option for Oregon homeowners who have seen the value of their homes grow over the years thanks to home price appreciation.
To illustrate how a cash-out refinancing program works, let’s use the example of a homeowner who still has an outstanding home loan amount of $120,000 on a property that is currently valued at $300,000. The homeowner could refinance the current mortgage for more than the amount still owed ($120,000).
If the homeowner wanted to take out $50,000 in cash from the home’s equity, they could refinance their mortgage for $170,000 (the $120,000 still owed plus the $50,000 they want to take out in cash).
This is a simplified explanation of how a cash-out refinance program works in Oregon, but there are several variations to the program that you can get more information from your trusted mortgage specialist.
Related: Cash Out Refinance After a New Purchase?
Take the Opportunity to Secure a Lower Interest Rate
Depending on when you took out your current mortgage, you may have locked in at a rate that is much higher than the going rates of today. As of this writing, during the week of December 29, 2023, the rate for a 30-year fixed-rate mortgage is 6.61%.
If your current mortgage rate is quite a bit higher than that, the difference can have a huge impact on how much you pay in interest for your mortgage throughout its term.
To show you how much of a difference that can make, let’s illustrate. A $400,000 mortgage at 7.0% on a 30-year fixed-rate term would come out to $2,634 per month in mortgage payments, and a total of $548,388 in interest alone over the 30 years.
The same mortgage amount with a rate of 6.0%, for instance, would come out to $2,379 per month in mortgage payments and a total of $456,545 in interest alone. That’s a difference of almost $92,000 just in interest! As you can see, even a difference of 1% in interest can mean a high amount of savings.
If the rate that you locked in at is much higher than today’s rate, it might be worth considering. In fact, a lower interest rate is one of the more common reasons for refinancing.
If you need the funds to cover a large expense and have a sizable amount of equity built up in your home, then a cash-out-refinance may be something to think about.
Rising Property Values Provide Opportunities For Cash-Out Refinancing
House values in Oregon have increased quite a bit in recent years, despite the recent dip over the past 12 months. Right now, the average home price in the state is $483,939, compared to $344,835 just 5 years ago. As such, we may see more Oregon homeowners using cash-out refinance loans in 2024, especially if rates start to come down.
With higher property values in Oregon, homeowners across the state can enjoy more equity in their homes.
Is a Cash-Out Refinance Right For You?
Oregon homeowners can use refinancing for many different reasons, including the following:
- To secure a lower interest rate on the new mortgage
- To reduce the size of monthly mortgage payments
- To shorten the mortgage term
- To switch from an adjustable-rate mortgage to a fixed-rate mortgage
- To convert some equity into cash (for cash-out refinancing, specifically)
Considering all this, is refinancing the right option for you? Will this type of financing program help you reach your financial goals?
Have Questions About Refinancing?
If you’re curious about cash-out refinancing or other mortgage products, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington and serve the entire state, as well as the broader Pacific Northwest region in WA, OR, CA, CO, and ID. We have been helping borrowers since 1992, and we’d love to help you too. Our mortgage financing experts can look at your current equity and mortgage balance to determine if cash-out refinancing – or any of our other mortgage programs, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans – is right for you. Get in touch with us with any questions you have about refinance loans in Oregon.